Farm subsidies, integration lift warehousing industry

PETCHANET PRATRUANGKRAI
THE NATION February 14, 2013 1:00 am

The outlook for the warehousing and silo industry in Thailand appears particularly bright, thanks to the government continuing its policy of farm subsidies, especially for rice, and many Thai and foreign investors, largely from Asean, eyeing investment in the country under upcoming regional integration.

Wiboonlasana Ruamraksa, director-general of the Internal Trade Department, yesterday said overall warehouse and silo business in the Kingdom was projected to grow by 10-15 per cent this year.

The Thai market is considered one of the largest in the region, as the country is at the heart of Southeast Asia, he said.

"With the upcoming Asean Economic Community opening up wider opportunities for Asean nationalities to hold up to 70 per cent of logistics businesses, including warehousing and silos, more investors are likely to invest heavily in the industry.

"The growth of the farming sector and the continuing farm-subsidy project by the Thai government will also encourage more investors," said the official.

An average of three new warehouse and silo enterprises have of late sought the department's approval each month, he said, adding that the industry needed high initial investment capital.

For warehousing, the initial investment is about Bt15 million for a small operation, while up to Bt100 million is required for silos requiring high technology for stocking goods and a cooling system.

Under the Foreign Business Act, the logistics sector is categorised as a service business, in which foreigners cannot hold more than a 50-per-cent share. However, logistics is a priority sector in Asean and Thailand is committed to allowing investors from other countries in the bloc to hold up to 70 per cent of a company, starting this year.

Wiboonlasana said that increasing the supply of warehouses and silos would facilitate the growth of both the farming and trading industries.

Asked whether the liberalisation of the logistics industry would challenge Thai enterprises and risk damaging their competitiveness, he said Thailand should not worry as businesses in the sector had a high capability to compete with those from other regional countries.

Many foreign investors, including non-Asean operators, have already invested in the business by forming joint ventures and receiving privileges from the Board of Investment.

To promote stronger Thai warehouse and silo enterprises, the department set up a certification programme aimed at enabling businesses to increase their operational efficiency.

So far, 229 local companies have received certification of a high standard of operation from the department, which targets certification of a further 20 businesses this year, he said.